How to Effectively Pitch Your Business Idea to Investors
You believe in your business, but you have to convince others to believe in it, too—a prospect that can be unnerving to some entrepreneurs. Take, for example, Amy Yoder, CEO of Anuvia Plant Nutrients: Yoder spent 12 months courting countless investors, trying to convince them to lend their money to her idea. She quickly learned that, "in front of investors—especially in the male-dominated agricultural industry—women don't get the same benefit of the doubt as men," she says. "One stutter, one misstep, one hesitation, and you can quickly lose credibility."
But with insider tips from Yoder and other female entrepreneurs who have successfully added investors' money to their budgets, the process doesn't have to be scary—and it can certainly be successful. Here is how to pitch your idea to investors, according to the women who've done it.
Demonstrate why the world needs your product or idea.
Skura Style cofounders Linda Sawyer and Alison Matz had an idea: They truly hated their kitchen sponges, and they realized if they hated them, other people must hate them, too. That's why they created a new polyurethane foam sponge. "But to convince investors, we had to prove it and quantify it," says Sawyer. "So, we did qualitative and quantitative research to gain evidence that there was indeed a universal 'hate-affair' with kitchen sponges and a void in the market." With that kind of data to present, Sawyer and Matz made it difficult for investors to say no. "The more that you can add dimension to the 'why' behind your idea in an objective manner, the easier it is to validate [it], leading to better chances of finding investors to back your idea," Matz says.
Know your competition.
How is your idea different from your competitors' products and services? To woo investors, you will have to be able to show why your idea will rise to the top. "When we met with prospective investors, we always came armed with physical product samples from every competitor to give a visual of how Skura stood out in the comprehensive landscape," describes Sawyer. "We had to do this because not all investor prospects were immersed in the category. In fact, some of them hadn't touched a sponge in years and the visual impact of seeing a sea of unattractive, dated sponges as a back drop against our modern, chic, happy sponges was always an 'aha' moment."
Matz says they also knew their competition well, so that they could explain why Skura was so much better. "We understood the brands' roles within their parent company corporate structures, their distribution, pricing, and go-to-market strategies," she says. "A deep understanding of the category from a business perspective is critical when bringing a disruptor upstart to the market."
Know your numbers.
The first time that HAY! Straws cofounder Emily Grose pitched an idea to an investor, "they were encouraging, but politely declined like, 'Come back to us when you have more sales data,'" she recalls. So, when Grose pitched HAY! Straws again, she came prepared with numbers, and she was taken "much more seriously," she says. The lesson? Know your numbers before you pitch. Sawyer and Matz knew their numbers, too: "To help investors envision the potential trajectory and investment potential in our business, we shared case studies of successful disruptor brands that had taken on behemoth competitors," says Sawyer. "We looked for products that had relevant qualities in terms of distribution, competitive situation, go-to-market strategy, and then we used their key metrics, such as sales, as relevant benchmarks for our business forecast."
Know the answers to the worst-case scenarios.
Part of being prepared is knowing what you'll do if something goes wrong. But, "when pitching an idea to an investor, a lot of people make the mistake of only telling investors how they will succeed," says Yoder. "Too many times, entrepreneurs show what will happen when everything goes right. But investors want to know what you're going to do when everything goes wrong." She advises entrepreneurs to have plans for the worst-case scenarios. Be able to answer questions such as, "What if you encounter a new competitor?" she asks. "What if your pricing is off? What happens in the event of new tariffs or regulations? Investors need to feel confident that when things don't go as planned, you're ready to protect their investment by pivoting to success."